BUSINESS NETWORKS IN E-COMMERCE INTERNATIONALIZATION –Two Finnish Companies Targeting Russia

With the proliferation of Internet, online shopping has become an increasingly essential part of global economy and thus, increasingly important field of research. While the internationalization process of a company has for long been in the focus of academic research, internationalization of e-commerce is a much newer field of study. The earlier empirical research has amply pointed out the difficulties of traditional internationalization models to explain the internationalization process of e-commerce companies. Conversely, business networks have been argued to play a major role in the e-commerce internationalization. The purpose of this study is to study how business networks influence the internationalization process of e-commerce companies. Conducted as a case study, this research studies the internationalization process of two Finnish e-commerce companies, Hong Kong and Hifi Studio, into possibly one of the most booming online markets - Russia. The empirical findings of the study concur with the earlier literature. The observed internationalization process differs from the assumptions of traditional international business models, and business networks are found influential for the process. However, the behavior of the two studied organizations is observed more independent than the network view to internationalization presumes. The trigger to internationalize rises from within the organizations and market potential is the primary explanation for selection of target markets. No network relationships were found to have an effect on foreign market selection, nor selection of mode of operations. This study indicates that exploring foreign markets is actually about investing in specific relationships within a business network, rather than overcoming economic, institutional, and cultural barriers. Companies utilize a wide array of relationships in their internationalization process and may effectively overcome disadvantages of operating in a foreign market by adopting partnerships with correct partners. However, building and maintaining operational business relationships is a demanding process, and organizations should prefer quality over quantity in their partner selection. Moreover, relationships where the focal party possess significant influence and leverage over other actor should be favored. Lastly, relationships need to be continuously evaluated and assessed in comparison with strategic business goals. Ultimately, e-commerce can be considered a new, low-risk, cost-effective, and relationship-oriented internationalization method, suitable especially in volatile market conditions as Russia today. This revolutionary new mode of international business activity calls for more profound focus of business managers and academia alike, as its weight on global trade continues to grow.

THE NETWORK EMBEDDEDNESS OF A FOREIGN SALES SUBSIDIARY The subsidiary personnel perspective

This study focuses on the network embeddedness of a subsidiary of a multinational company. Academic research has identified the rising role of geographically dispersed subsidiaries as valuable sources of strategic knowledge and value to the whole multinational company. Moreover, previous research suggests that in order to gather this knowledge and transfer it across the multinational company, a subsidiary needs to be insider, i.e. embedded, in both its local external network as well as in its internal corporate network. The purpose of this study is to describe the network embeddedness of a foreign sales subsidiary from the subsidiary personnel perspective and hence increase understanding on the phenomenon and provide suggestions to enhance overall subsidiary embeddedness. The empirical study was based on a theoretical framework on subsidiary network embeddedness and comprised a qualitative single-case study in a French sales subsidiary of a Nordic multinational company. Data collection included nine semi-structured interviews and six Network Pictures drawing tasks. Altogether eight people out of subsidiary staff of eleven participated in the study providing relatively exhaustive overview of the subsidiary personnel perspective. Based on the collected data, the relationships toward the most relevant network actors, both internal and external were identified and their impact on the subsidiary embeddedness were analyzed separately. Moreover, the subsidiary’s simultaneous embeddedness in both internal and external network, that is, the subsidiary dual embeddedness, was discussed to increase understanding how subsidiary personnel perceive their role between the two networks and its impact on the subsidiary activities. The findings of the study suggest that the subsidiary personnel perceives strong external embeddedness increasing internal and dual-embeddedness since intensive external collaboration requires including and activating other corporate units as well. The role of the local sales subsidiary is to act as the interpreter and connector between the internal and external network actors. Hence, by actively promoting relationship linkages between internal and external actors, the subsidiary may adopt an active role beyond its original corporate mandate. In order to achieve this, both managers on the subsidiary and corporate level need to promote open communication and increase cultural understanding between different corporate units.